The Strange Case of Dr. Lehman and Mr. Hudson

(With Apologies to Robert Louis Stevenson)

     In the years before its collapse, Lehman used a small company — its “alter ego,” in the words of a former Lehman trader — to shift investments off its books…. While Hudson Castle appeared to be an independent business, it was deeply entwined with Lehman.
–The New York Times

Allow me to tell you the strangest tale I know. It concerns two men: Dr. Lehman and Mr. Hudson. They  were seemingly polar opposites: Dr. Lehman was sane and fiscally conservative; Mr. Hudson was a drunkard and a risk taker—a reprobate bound for debtors’ prison.

I first met Lehman when he and I were accounting undergraduates together at Harvard. Even then his head was filled with queer ideas: “If one could duplicate oneself,” Lehman said, “–say, create a sort of ‘alter ego’–one could transfer all of one’s bad debts and risky investments to it, and maintain a clean balance sheet.”

“But what would be the point, old boy?” I replied. “This alter ego of yours would still be you, as it were, and would still be responsible for your financial obligations.”

 Lehman had no response to this, but just shook his head obstinately and said no more.

The next time I ran into Lehman was several years later. He had earned his doctorate in advanced theoretical accounting by then; his bizarre thesis was that, properly insured, one could derive more profit from having huge debt than from having none. Over lunch we discussed the tittle-tattle of our trade.  “Like all great men,” Dr. Lehman said, “this fellow Madoff is misunderstood in his own day. His genius will be appreciated in the fullness of time.”

“Speaking of speculators, have you heard of this fellow Mr. Hudson?” I replied. “All of Wall Street is talking about him. He’s been making the most outrageous bets with his investors’ money in imaginary derivatives. It’s only a matter of time before the scoundrel is ruined.”

Up until then, we had been having a convivial meal, but at the mention of Mr. Hudson’s name, Dr. Lehman blanched, as if he had been forced to swallow a bad investment.  “I don’t know anyone named ‘Mr. Hudson.’ ” With that, he abruptly left me with the remains of our repast—and the check.

I quickly forgot about Dr. Lehman and his strange behavior; but I continued to follow Mr. Hudson’s exploits. As I had predicted, he soon came a cropper. His losses were so great that his insurer—the venerable old firm of Fyre, Woods, and Byrne— collapsed. With his creditors closing in and no means of escape, he took the one course of action that was still open to him: he committed bankruptcy.

So much you doubtless read in Portfolio at the time; but now let me reveal what happened next. It was suppressed by the authorities, fearing a panic. As corrupt, dissolute, profligate Mr. Hudson lay on the boardroom floor bleeding red ink, he took on the lineaments  of honest, diligent, thrifty Dr. Lehman! It seems they were one and the same financial entity all along!  “There are some things man was not meant to securitize,” he uttered with his final breath, and disincorporated.

I was subsequently surprised to discover that Dr. Lehman had named me the sole inheritor of his remaining real assets–his mansion, several protected offshore accounts, and his fiancé,  Nancy, who told me Dr. Lehman often seemed “not himself.”

So we come to the end of my strange tale. But as I sit in the evening in my easy chair, a snifter of brandy in one hand, Nancy on my lap, I am still troubled by one thought: Are there more Mr. Hudsons out there—and whose hedges will they try to clip next?

Robert Brenner is a humorist, critic, and ventriloquist. His work has been published in New York Magazine, Open Salon (, and Happy.